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DECISION No. 24/2003/QD-NHNN OF JANUARY 7, 2003 PROMULGATING THE REGULATION ON OPENING AND TERMINATION OF OPERATION OF BRANCHES AND REPRESENTATIVE OFFICES OF NON-BANK CREDIT INSTITUTIONS

THE STATE BANK GOVERNOR

Pursuant to State Bank Law No. 01/1997/QH10 and Credit Institution Law No. 02/1997/QH10 of December 12, 1997;

Pursuant to the Government's Decree No. 86/2002/ND-CP of November 5, 2002 defining the functions, tasks, powers and organizational structure of the ministries and ministerial-level agencies;

Pursuant to the Government's Decree No. 16/2001/ND-CP of May 2, 2001 on the organization and operation of financial leasing companies;

Pursuant to the Government's Decree No. 79/2002/ND-CP of October 4, 2002 on the organization and operation of financial companies;

At the proposal of the director of the Department for Banks and Non-Bank Credit Institutions,

DECIDES:

Article 1.- To promulgate together with this Decision the Regulation on opening and termination of operation of branches and representatives offices of non-bank credit institutions.

Article 2.- This Decision takes effect 15 days after its signing.

Article 3.- The director of the Office, the director of the Department for Banks and Non-Bank Credit Institutions, the heads of the units, of the State Bank, the directors of the State Bank's branches in the provinces or centrally-run cities, the Managing Board chairmen and general directors (directors) of the non-bank credit institutions shall have to implement this Decision.

For the State Bank Governor

Deputy Governor
TRAN MINH TUAN

REGULATION ON OPENING AND TERMINATION OF OPERATION OF BRANCHES AND REPRESENTATIVE OFFICES OF NON-BANK CREDIT INSTITUTIONS

(Promulgated together with the State Bank Governor's Decision No. 24/2003/QD-NHNN of January 7, 2003)

Chapter I

GENERAL PROVISIONS

Article 1.-

1. This Regulation shall apply to the opening and the termination of operation of domestic branches and representative offices of non-bank credit institutions established and operating in Vietnam.

2. The opening and the termination of operation of overseas branches and representative offices of non-bank credit institutions mentioned in Clause 1 above shall comply with separate guidance of the State Bank.

Article 2.- In this Regulation, the following terms shall be construed as follows:

1. Non-bank credit institutions are financial leasing companies defined in the Government's Decree No. 16/2001/ND-CP of May 2, 2001 on the organization and operation of financial leasing companies, or financial companies defined in the Government's Decree No. 79/2002/ND-CP of October 4, 2002 on the organization and operation of financial companies, and other non-bank credit institutions.

2. Branches of non-bank credit institutions are their dependent units, which have their own seals and operations compliant with the operation contents of parent non-bank credit institutions under the latter's authorization.

3. Representative offices of non-bank credit institutions are their dependent units, which have their own seals and task of representing non-bank credit institutions under the latter's authorization. Representative offices are not allowed to conduct business activities.

Article 3.-

1. Non-bank credit institutions wishing to open and terminate operation of their branches and/or representative offices must obtain the State Bank's approvals.

2. After obtain written approvals of the State Bank, non-bank credit institutions shall issue decisions on:

a/ Opening of their branches in geographical areas where exists the demand for the operation thereof, including localities where they are headquartered;

b/ Opening of their representative offices in geographical areas where exists the demand for the operation thereof;

c/ Termination of operation of their branches or representative offices when the operation demands no longer exist.

Chapter II

OPENING OF BRANCHES AND REPRESENTATIVE OFFICES

Section I. CONDITIONS FOR OPENING BRANCHES AND REPRESENTATIVE

OFFICES

Article 4.- Non-bank credit institutions may open their branches and/or representative offices according to the provisions in Article 3 of this Regulation when fully meeting the following conditions:

1. Having operated for at least 2 years as from the date of commencing operation.

2. Having made profits in business operations for the latest two years. The overdue debit rate at the end of the preceding quarter is under 5%.

3. Having a charter capital at least equal to the legal capital prescribed for non-bank credit institutions in the Government's Decree No. 82/1998/ND-CP of October 3, 1998 promulgating the list of legal capital levels of credit institutions.

4. Having an administration and executive apparatus and an internal inspection system effectively operating.

5. Having an information system which can meet the management requirements.

6. Not violating the regulations on operation safety, including:

a/ Cases where no loan or financial lease is allowed to be provided or made;

b/ Restrictions on credit provision;

c/ Limits of loan provision, financial leasing, guarantee;

d/ Limits of capital contribution and share purchase;

e/ Percentage for securing safety;

f/ Reserve for risks.

7. Not violating other law provisions.

Section II. DOSSIERS AND PROCEDURES FOR OPENING BRANCHES AND REPRESENTATIVE OFFICES

Article 5.- A dossier requesting the State Bank to approve the opening of a branch or representative office of a non-bank credit institution includes:

1. The Managing Board chairman's or authorized person's written request for the State Bank's approval of the opening of branch or representative office of the non-bank credit institution, which briefly states the necessity, name, location, operation contents and scope of such branch or representative office.

2. The Managing Board chairman's letter of authorization (for case of authorization).

3. The Managing Board's resolution on the opening of branch or representative office.

4. The scheme on opening a branch or representative office, clearly stating the necessity and operation demand, study of market in geographical area; tentative organizational apparatus, operation contents and scope; and operation plan for the first three years.

5. The non-bank credit institution's financial report for the latest two years, enclosed with the auditing report of an independent auditing organization. Such documents must be the originals; if they are copies, they must be certified by the agencies that have issued the originals thereof or notarized by the State notary public.

6. Document of the People's Committee of the province or centrally-run city where the non-bank credit institution intends to locate its branch office or representative office, permitting the non-bank credit institution to locate its branch office or representative office in its locality.

In cases where the provincial/municipal People's Committee gives no comments or gives comments only after the State Bank's written approval of branch or representative office opening is obtained, the non-bank credit institution shall inscribe such on the document of the Managing Board chairman for examination by the State Bank.

7. Document of the director of the State Bank's branch in the province or centrally-run city where the non-bank credit institution intends to locate its branch office or representative office on the necessity and geographical area for operation of such non-bank credit institution's branch or representative office, except for cases where joint-stock non-bank credit institutions open their branches or representative offices in the same province or centrally-run city with their headquarters.

8. Written certification of the rights to lawfully own or use the branch office or representative office.

Article 6.- The order and procedures for requesting the State Bank to approve the opening of branches and/or representative offices of non-bank credit institutions:

1. Joint-stock non-bank credit institutions shall send two dossier sets on opening of branches and/or representative offices to the State Bank's branches in the provinces or centrally-run cities where such institutions are headquartered.

Within 15 working days after receiving complete dossiers, the State Bank's provincial/municipal branches shall examine such dossiers and give written opinions on conditions and dossiers of application for branch or representative office opening according to the provisions in Articles 4 and 5 of this Regulation, then forward them to the State Bank (the Department for Banks and Non-Bank Credit Institutions) enclosed with one dossier set of the concerned joint-stock non-bank credit institutions.

2. State-run non-bank credit institutions, non-bank credit institutions affiliated to credit institutions, joint-venture non-bank credit institutions and non-bank credit institutions with 100% of foreign capital shall send two dossier sets of application for opening branches and/or representative offices to the State Bank (the Department for Banks and Non-Bank Credit Institutions).

3. Within 30 working days after receiving complete dossiers of State-run non-bank credit institutions, non-bank credit institutions affiliated to credit institutions, joint-venture non-bank credit institutions and non-bank credit institutions with 100% of foreign capital, or 15 working days after receiving complete dossiers of joint-stock non-bank credit institutions forwarded by the State Bank's provincial/municipal branches, the State Bank shall examine and reply in writing whether it approves or disapproves the opening of branches and/or representative offices of the applying institutions. In cases of disapproval, the State Bank shall clearly state the reasons therefor in writing.

Article 7.-

1. Within 6 months after the State Bank issues written approvals, the non-bank credit institutions shall have to issue decisions on opening of their branches and/or representative offices and complete necessary procedures prescribed by law for putting such branches and/or representative offices into operation.

2. Before their branches and/or representative offices commence operation, the non-bank credit institutions shall have to make registrations at the business registration agencies and publish the operation commencement on the central or local newspapers according to the provisions of law.

3. The non-bank credit institutions shall send to the State Bank decisions on opening of branches and representative offices, and written registrations granted by the business registration agencies and relevant documents.

Chapter III

TERMINATION OF OPERATION OF BRANCHES AND REPRESENTATIVE OFFICES

Article 8.- Non-bank credit institutions shall terminate the operation of their branches and/or representative offices after they obtain the State Bank's written approvals.

Article 9.- A dossier of application for the State Bank's written approval of termination of the operation of a non-bank credit institution's branch or representative office includes:

1. Document of the Managing Board or authorized person on the termination of operation of branch or representative office, clearly stating the reason therefor, name and address of the branch or representative office applying for operation termination.

2. Letter of authorization of the Managing Board chairman (for case of authorization).

3. The Managing Board's resolution on the termination of operation of branch or representative office.

4. Plan on settlement upon the termination of operation of branch or representative office.

5. Document of the director of the State Bank's branch in the province or centrally-run city where the branch or representative office which intends to terminate its operation is located on the termination of operation of such branch or representative office of the non-bank credit institution, except for cases where a joint-stock non-bank credit institution terminates the operation of its branch or representative office, which is located in the same province or city with such institution's headquarters.

Article 10.- The order and procedures of applying for the State Bank's approvals of the termination of operation of branches and/or representative offices of non-bank credit institutions shall be as follows:

1. Joint-stock non-bank credit institutions shall send two dossier sets for the termination of operation of their branches and/or representative offices to the State Bank's branches in the provinces or centrally-run cities where such institutions are headquartered.

Within 15 working days after receiving complete dossiers, the State Bank's provincial/municipal branches shall examine the dossiers and give their written opinions on the requests for operation termination of branches and/or representative offices of the institutions which have submitted the applications and dossiers according to Article 9 of this Regulation and send them to the State Bank (the Department for Banks and Non-Bank Credit Institutions), enclosed with one dossier set of the joint-stock non-bank credit institutions.

2. State-run non-bank credit institutions, non-bank credit institutions affiliated to credit institutions, joint-venture non-bank credit institutions and non-bank credit institutions with 100% of foreign capital shall send two dossier sets for termination of operation of their branches and/or representative offices to the State Bank (the Department for Banks and Non-Bank Credit Institutions).

3. Within 30 working days after receiving complete dossiers of non-bank credit institutions mentioned in Clause 2 of this Article and 15 working days after receiving dossiers of joint-stock non-bank credit institutions forwarded by the State Bank's provincial/municipal branches, the State Bank shall consider and reply in writing whether it approves or disapproves the operation termination of branches and/or representative offices of the applying institutions. In case of disapproval, the State Bank shall clearly state the reasons therefor in writing.

Article 11.-

1. Within 30 working days after receiving written approvals of the State Bank, non-bank credit institutions shall have to issue decisions and terminate the operation of their branches and/or representative offices.

2. Operation termination decisions must have the following principal contents:

a/ Names and addresses of to be-operationally terminated branches and/or representative offices;

b/ Reasons for termination of operation of branches and/or representative offices;

c/ Date of operation termination;

d/ Liabilities of non-bank credit institutions toward their creditors.

3. Decisions on operation termination of branches and/or representative offices of non-bank credit institutions must be sent to the State Bank, the business registration agencies, creditors, persons with relevant rights, obligations and interests; such decisions shall also be posted up at the headquarters of the non-bank credit institutions and the offices of their operationally terminated branches or representative offices, and published on central and local newspapers according to the provisions of law.

Article 12.- Non-bank credit institutions which have terminated the operation of branches or representative offices shall have to pay all payable amounts to their creditors and settle all relevant matters according to the provisions of law.

Chapter V

IMPLEMENTATION PROVISIONS

Article 13.- The amendment and/or supplementation to articles in this Regulation shall be decided by the State Bank Governor.

For the State Bank Governor

Deputy Governor
TRAN MINH TUAN